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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (64581)	6/26/2006 4:35:02 PM
From: Perspective	Read Replies (2) \| Respond to of 110194

That Roach piece is an excellent example of why he's such a good read. People had faulted him recently for "turning bullish". But he makes the clear distinction now of exactly what he means: the fact that the authorities are apparently working toward resolution of the imbalances gives him optimism for the global economy, but that optimism does not extend to the financial markets, or for that matter even the US economy. morganstanley.com The good news is that none of this speaks of a terribly disruptive endgame for global rebalancing. Had global policy makers ignored the problem, a dollar crisis at some point in the not-so-distant future was a distinct possibility, in my view. But now the combination of architectural reform, currency adjustments, and monetary tightening points toward a more orderly, and hopefully benign strain of global rebalancing. However, it is important to stress that such orderly adjustments in the real economy are no guarantee for orderly adjustments in liquidity-driven markets -- especially those risky assets that have gone to excess. Like most mainstream economists, though, he confuses the causality between the financial markets and the economy. He seems to see that a good economy doesn't necessarily translate into a good financial market environment, but he doesn't get the fact that a poor financial market will cause a poor economic environment. BC